Dongwu Ma Haobo recommended that Tianguang Zhongmao has 41% upside

Dongwu Ma Haobo recommended Tianguang Zhongmao, the index was near 3000 points when the company was suspended, and it is currently above 3200 points, and there is no pressure to make up for the decline. Considering that the company's PPP orders in hand are sufficient and cash is abundant, it is expected that the net profit of the garden business in 17-18 years will be 550 million yuan; the average valuation of comparable companies in the mushroom industry in 17 years is 35x, the average valuation of comparable companies in the garden industry in 17 years is 34x, and the valuation of both business targets is given 30x, corresponding to the target market value of 31.6 billion yuan after the additional issuance; the company's market value after the increase is 22.4 billion, and there is still 41% room to maintain the buy rating.

Edible mushroom business: endogenous + epitaxial mergers and acquisitions, expansion of enoki mushroom production capacity, and significant increase in the proportion of non-enoki mushrooms. 1) After the company's 15-year acquisition of Zhongmao Biology, vigorously develop the edible mushroom business: Zhongmao Biology mainly focuses on enoki mushrooms, 15 years of enoki mushroom revenue accounted for 84%, the price is higher than the industry 20%, gross profit margin of 44%, net profit margin of 30% are higher than the same industry, strong profitability, commitment to 16-18 years to achieve net profit of 1.5, 18, 200 million. Although the enoki mushroom 17 years into a small short-term oversupply, but the company's net interest rate is stronger than the competition, one of the leading Xuerong biological net interest rate is only 10%, if the price drops by 10% will accelerate the elimination of small and medium-sized enterprises, small and medium-sized enterprise pesticide residues exceed the standard, concentration increase is conducive to the development of the industry; after the completion of mergers and acquisitions, the company's enoki mushroom profit accounted for only 10%. 2) It is planned to acquire 100% of the equity of Shennong Mushroom Industry and Yu irrigation agriculture for 1 billion yuan and 1.6 billion yuan respectively, and the merger and acquisition exceeded expectations. Non-enoki mushroom companies with high profitability and high concentration have all been acquired by Tianguang, and the company has become the leader with the largest category and the strongest profitability in the industry. The high price and stable price of non-enoki mushrooms are conducive to the long-term development of the company. The company has abundant cash, and the possibility of cash acquisition of high-quality edible mushrooms and biotechnology companies at home and abroad is not ruled out in the future.

Garden business: many orders in hand, sufficient cash. Zhongmao Garden is the industry leader in South China, leading the ecological restoration technology industry, currently in hand garden project orders are abundant, long-term performance growth certainty is strong; and Zhongmao Garden promised 16-18 years of net profit of not less than 1.8, 2, 220 million yuan respectively. In December 2016, the company issued bonds to raise 1.2 billion yuan, of which 840 million yuan will be used for garden and biological business, and analysts judge that the company's PPP business is expected to grow within 2 years.

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